MONITARY SYSTEM

ORIGIN AND GROWTH OF MONEY

 Barter system
 Commodity Money
 Metallic age
 Paper money
 Barter system

In barter age there was no money. The trade used

to take place without any money. Goods were
exchange for goods. And there was a problem of
coincidence of wants.
“Barter is the direct exchanged of commodity
or service for another without the money”.
As the society developed people found that thy need some
commodities more than others and their wants are of varying
importance. This increased the importance of some
commodities and goods. Gradually these commodities attained
the status of money in that era. People used to value these
higher than others. So we can say that different goods or
commodities became money in that era.
 Metallic Age
Man found gold, silver and other
precious metals.
Paper Money
The people were in the habit of keeping
these gold coins, and bars with
goldsmiths. The receipts issued by
goldsmiths become medium of exchange
over time.
INCONVENIENCE OF BARTER
 No Measure of Value
 No store of Value
 No investment/ savings
 Tax collection
 Difficulties in transfer of wealth
 Double coincidence of wants.
 Comparison of Living Standard
 No capital Formation
How use of money overcome
inconveniences of Barter
 Medium of Exchange
 Store of value
 Price Mechanism
 Credit and Advances
 Banking institutions
 Investment and Savings
 Public Finance/ Government Revenues
 Foreign investment
Other Forms of Money
a) Black Money: Black money is one which has been
gathered through illegal means.
b) White money: White money is one which has been
earned through legal and legitimate means.
c) Cheap Money: Cheap money is one whose cost of
borrowing is less than the standard rate of interest.
 MONEY MARKET

Meaning of Money Market:

Money market refers to the market where money and highly
liquid marketable securities are bought and sold having a
maturity period of one or less than one year.
It is not a place like the stock market but an activity conducted by
telephone.
The money market constitutes a very important segment of the
Indian financial system.
The highly liquid marketable securities are also called as ‘ money
market instruments' like: treasury bills, government securities,
commercial paper, certificates of deposit, call money, repurchase
agreements etc.
 How important money?
I said To Money: u r Just a Piece Of Paper,
Money Smiled And Said: "Of course I Am a
Piece Of Paper, But I Haven't Seen a Dustbin
Yet In My Life"
 Importance
1. Money being the life blood of a modern economy,
its circular flow gives a clear picture of the economy.
2. We can know from its study whether the economy is
working smoothly or there is any disturbance in its
smooth functioning.
3. The circulation of money is immense significance for
studying the functioning of the economy and for
helping the government in formulating policy
measures. .
 Other Importance of Money in Modern
Economy
1. Basis of Market Mechanism
2. Motivation to economic activities
3. Helpful in capital formation
4. Removal of defects of barter system
5. Helpful in international payments
6. Fulfillment of deficit budgeting
7. Social Importance of money
8. Political Importance of Money
9. Indicator of Economic Welfare
10. Financial assistance to international financial institutions
11. Index of Individual progress
12. Basis of investment system
13. Helpful in transfer of wealth
What’s more importance than money?

 HEALTH
 FAMILY
 FRIENDSHIP
 HELPING OTHERS